Intel doubles 2nd-quarter profits

Matthew Fordahl, The Associated Press

Published 10:00 pm, Tuesday, July 15, 2003

SAN JOSE, Calif. -- Semiconductor giant Intel Corp. said yesterday that its second-quarter profits doubled from a year ago as stronger-than-expected demand for computer microprocessors offset the weakness of its communications chip business.

It's the third consecutive quarter that Intel has exceeded forecasts, though executives and analysts said there's no evidence to suggest a long-hoped-for upswing in consumer and corporate computer buying.

"I haven't seen a PC upgrade cycle. I haven't seen evidence of corporate (technology) budgets going up," said Andy Bryant, Intel's chief financial officer. "What it really feels like is more of a return of the old days, where second halves are a little bigger than first halves, and if you're lucky, enough bigger you get a little bit of underlying growth."

Intel, based in Santa Clara, Calif., expects third-quarter sales to be between $6.9 billion and $7.5 billion -- well above last year's third-quarter revenue of $6.5 billion.

The company, which celebrated its 35th anniversary yesterday, also said its investments in research and development during the three-year downturn are starting to pay off. CEO Craig Barrett said the investments "continued to generate strong products."

For the three months ended June 28, Intel earned $896 million, or 14 cents per share, on sales of $6.82 billion. That compares with a profit of $446 million, or 7 cents per share, on revenue of $6.32 billion in the same period last year.

Analysts surveyed by Thomson First Call were expecting a profit of 13 cents a share on sales of $6.7 billion. In June, the company narrowed its revenue forecast to between $6.6 billion and $6.8 billion.

"Overall, the quarter came in slightly better than we expected, led by good demand in our computing-related business, which posted solid year-over-year results," Barrett said. "We continued to see strength in emerging markets, and our Asia-Pacific region set an all-time revenue record."

Intel said its microprocessor business is performing at the high end of expectations. Sales grew nearly 12 percent, to $5.8 billion from $5.2 billion in the same period last year.

It recently released a Pentium 4 at 3.2 gigahertz and introduced new chip sets that overcome bottlenecks in the data flowing between the processor and memory and hard drive. It's also heavily marketing its Centrino brand of chips for wireless laptop computers.

"Centrino is hitting all the targets we set for it," Bryant said. "We saw good growth in the mobile space in the second quarter."